Stocks News: Gulf Vulnerable To Further Profit-Taking

Gulf stock markets, particularly Dubai and Abu Dhabi, remain vulnerable to further profit-taking on Tuesday as selling of emerging markets continues, though in the Gulf there is none of the panic seen elsewhere.

The Dubai index has dropped for two consecutive sessions to close at 3,688 points on Monday, retreating from last week’s five-year high. It is still up 9.4 per cent in January after one of the best performances globally in 2013 with a 108 per cent surge.

“Any break below 3,620 calls for probing sell-offs to attack the neckline level of 3,515 – the high formed on January 5 – and then likely test 3,420,” Shiv Prakash, senior technical analyst at NBAD Securities, says in a note.

Some traders are calling for clients to book profits and return at lower levels. Most consider the correction healthy for the market, and not a reason to panic as local economic fundamentals and the long-term bullish outlook have not changed.

Asian shares remain under pressure on Tuesday because of fears over a Chinese growth slowdown and a reduction of U.S. monetary stimulus.

In Kuwait, top telecommunications operator Zain may come under selling pressure after the firm reported near-flat fourth-quarter profit of 51 million dinars ($181 million), missing two analysts’ estimates of 52.1-59.1 million dinars.

The stock hit a near five-year low on Sunday before recovering 1.6 per cent on Monday.

In Egypt, the tone is strong after the top military council gave the army chief, Field Marshal Abdel Fattah al-Sisi, a green light on Monday to seek election as president. The popular opinion is that Sisi is likely to win the vote with Egyptians weary of turmoil.

Cairo’s benchmark index climbed 0.6 per cent on Monday to 7,257 points; it is testing very strong technical resistance in the 7,248-7,693 area, the peaks in January 2011 and April 2010.